Sept. 5, 2002 — It’s the quiet fear behind anyone who’s ever sold anything on an auction Web site. What if the winning bidder doesn’t pay? Sellers offering up pricey Cisco Systems hardware on eBay recently know what that feels like. Well over $1 million in Cisco auctions have been ruined by bidders who simply disappear after the auction has ended. Some say it’s an elaborate fraud orchestrated by “the Cisco Raider.” Others think it’s just vandalism. But perhaps of greater concern, some eBay sellers are getting the feeling that the problem of disappearing auction winners is getting worse.
They're called “deadbit bidders.” They ready a bid that’s sure to win an auction, far above market value, and when the auction’s over, they just disappear. After three such incidents, eBay generally suspends the user. But that’s no deterrent. Determined deadbeats just re-register under a new name and start all over.
It’s more than just an aggravation for the eBay seller, who now has to start the selling process over again. eBay doesn’t refund the listing fee — $3.30 for items over $200 — so that’s lost. Any other marketing fees, such as placement on eBay’s front page, are also lost. The seller must fill out two separate forms and wait about a month to issue a complaint and ensure that eBay doesn’t deduct its selling fee.
And the consequences are even worse than that, according to one repeat victim of deadbeats who asked not to be identified. The loss of time can cut deeply into sale prices.
“One item I had to list three times,” he said, because the first two auctions for the Cisco router he was selling were ruined by deadbeats. On the third try, he sold it using eBay’s “Buy it Now” feature “just to get rid of it” at $650. It likely would have sold for $800 at the initial listing, but in the interim four weeks, routers from failed dot-coms flooded the market.
It’s difficult to say just how widespread the problem is, but three avid eBay sellers told MSNBC.com their deadbeat rates can vary between 5 percent and 15 percent. eBay power seller Geoff Giglio, who auctions 300 to 500 items each month, said he sees 20 to 40 deadbeats monthly.
Marc Van Horn or Ft. Lauderdale, Fla., says deadbeat rates are high and getting higher.
“In one month I had 14 percent deadbeat bidders for my auctions,” Van Horn said.
eBay spokesperson Chris Donlay said “that sounds high,” but added that “I have not heard a sitewide statistic.”
“It’s not a large amount,” Donlay said. “If you look at all sorts of fraud, it amounts to just one-one hundredth of 1 percent of transactions.”